As the U.S. and allies tighten sanctions on Russia and choke off investor demand for its assets, parts of Wall Street are jumping on the buying opportunity that it’s creating.
Goldman Sachs and JPMorgan Chase have been purchasing beaten-down company bonds tied to Russia in recent days, as hedge funds that specialize in buying cheap credit look to load up on the assets, say people with knowledge of the private transactions.
Finding ways to wager on distressed securities is standard fare on Wall Street. But doing so in the wake of Russia’s widely condemned invasion of Ukraine brings unique risks. World leaders are seeking to punish some Russian companies and cut the country off from the global financial system, and any firm perceived as working against those interests faces potential reputational damage, market watchers say.
JPMorgan was telling clients that it traded about $200 million of Russian and Ukrainian corporate debt Thursday, including from clients seeking to exit positions. At one major U.S. hedge fund, a decision was made to avoid Russian bonds entirely for now. The specter of holding debt that could become untradeable in another round of sanctions is too risky, and the war is just a week in. At another, the decision was made to look only at corporate bonds that aren’t majority-owned by the Russian government.
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